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Lucy, Esq.
Lucy, Esq., Lawyer
Category: Employment Law
Satisfied Customers: 27682
Experience:  Former judicial law clerk, lawyer
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I have a pet sitting business and re IC's. If they 't have

Customer Question

I have a pet sitting business and hire IC's. If they don't have their own dog walking supplies I ask them if they'd like to use mine.
The contract they have says that upon leaving they need to turn in the clients' keys, fobs, and any supplies they borrowed. If not returned, then the amount of supplies, etc will be deducted from paycheck.
Also- the contract says if a job isn't done correctly it won't be paid.
One of my ICs was not doing the visit time correctly. The clients wanted 30min dog visits. He was dishonest with the check in and out time and the clients caught this on their video camera.
I spoke and then later emailed the IC and said we will no longer be using his services and to return the supplies and also the clients' house keys and fobs.
He has not turned them in.
We told him paycheck will be with-held until we get them back. (It will cost hundreds of dollars rekeying homes and replacing expensive fobs- the kind you need to get into high rise buildings and use the elevators.)
He had once threatened to tell the IRS that we are hiring IC's and not employees. But we do everything the right way I believe - the times and how to do a job are dictated by the clients with the dogs. And he did not have a set schedule. He would tell us when he would like to work each month or week.
What do I do? Can I press charges since he has people's property? Can I withhold his paycheck? He signed a contract agreeing that paycheck will have deduction of items not returned.
Thanks!
Submitted: 1 year ago.
Category: Employment Law
Expert:  Lucy, Esq. replied 1 year ago.

Hi,

I'm Lucy, and I'd be happy to answer your questions today. I'm sorry to hear that this happened.

Because you voluntarily gave him the supplies, if you report the items as stolen, the police will likely tell you that this is a civil issue and suggest that you sue in Small Claims Court for a refund. However, it is possible that since he's holding people's keys, which gives him access to their homes, an officer will go out and talk to him to try to get them back. They don't have to, but they might, so you can call them if you'd like.

State and federal law prohibit an employer from withholding funds from an employee's paycheck if doing so would bring him below minimum wage for the hours worked. I know that you said he's an independent contractor, however, independent contractors are usually paid for the job, not per hour. So if he complains and a judge finds that he really is an employee, you could be charged with a third degree felony. You can, however, return his paycheck and then sue for the value of the equipment he refuses to return.

He has a right to report you to the IRS if he believes that he really was an employee, not an independent contractor. Short of reaching some kind of settlement with him, there really isn't a way to stop him. If you're doing everything you're supposed to do, then you don't have anything to worry about. If the people who work for you ARE employees, then it may be better to know so you can figure out the next step.

Generally, employees work when and where the employers tells them, using employer equipment, and are assigned specific tasks. They're paid by the hour, and the employer tells them how to complete the work assigned. Having a flexible schedule or providing the employer with availability does not automatically make someone a contractor. Independent contractors are paid by the job, and they are usually free to accept a given job in any way they wish, as long as the job is done. Independent contractors frequently use their own equipment to do jobs. The key is how much control you have over the work.

Here is more information that may help:

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee

It's important that you are 100% satisfied with my courtesy and professionalism. Thank you.

Customer: replied 1 year ago.
I don't pay by the hour, it's by the job.
The ICs tell me when they want to work and I just forward the clients' emails and they say if they want to do the visits or which visits they would like to do. (So it is pay by visit).
I like it when they have their own supplies but I've never had anyone have their own- I always ask them if they have their own leashes, traveling crates, Etc.
So even though he signed a contract that said anything he uses from me needs to be returned and clients must have their keys back otherwise it is taken from paycheck is illegal?What about the clients who caught him doing 10min visits when he was contracted with 30min? They aren't paying for the visits...do I have to use my own money and pay him anyway?
Is there any suggestion - legal verbiage I could use that could maybe push him a little to do the right thing?
I'm leaving town tomorrow for a week and thought maybe emailing him:
I'd like to get this settled before I leave. I need 'x,y, z keys and fobs back, along with the supplies; I'll be at my house till this time so you can drop your things and I can give you your paycheck.Also- I read somewhere that I legally have up to 90 days to pay him.I don't believe I would be in trouble with IRS...but if he were to file a report what happens? Does he have to pay to file--- what are the chances I would be in trouble. He is the only person in 6 years who has been acting like this- I wish I had never worked with him- he was a friend of a workers and I gave him a break. I don't want to lose my business but need those clients' keys back.
I wonder if I should tell them what is going on- and see if they press charges? Maybe that is something I can include in my email?
Customer: replied 1 year ago.
I mean maybe email him "I would like this to be done with but if the keys and fobs etc aren't returned, that I will be forced to notify the clients and charges may be filed against you."
If charges were filed would he get arrested?
Expert:  Lucy, Esq. replied 1 year ago.
If he's truly an independent contractor who is paid by the job, and not hourly, you do not have to pay him for any job he did not do. The paycheck law applies to employees. So does the law regarding payment of final wages. Those laws don't apply to independent contractors.
The IRS will investigate if they get a report. They'll look at your business records, and probably interview you. There is no fee to an individual who asks IRS to investigate a possible violation of the law. The odds that you'll get in trouble come down 100% to whether your employees are properly classified. If they are, then you don't have anything to worry about.
You have the ability to send him a demand letter, giving him an opportunity to return the keys and other items or face a lawsuit, but we're unfortunately not allowed to give you specific verbiage. If you want to do that, yes, you can let him know that you'll also report the keys as stolen and sue him for the cost of replacing them. An email is fine, however, if it doesn't mention any consequences for not returning the stuff, then it has no bite, and he'll probably ignore it. He doesn't sound like someone who's overly compelled to do the right thing just because it's the right thing to do.
It is extremely unlikely that police would arrest him. They might go out and talk to him. But, like I said, they could also tell you that this is a civil issue and that you need to sue. Even if they do decide to charge him with something, he'd get a summons in the mail. People aren't arrested for minor offenses- the jails are simply too overcrowded.
Customer: replied 1 year ago.
Okay- I'm feeling better...
The only thing that might seem a little 'employee-ish' in my IC contracts is that I do say that 2 weeks notice is preferred if they can't work a job they've signed up for. I tell them to please find a replacement for them-another IC...but alas, they mostly don't so I end up scrambling...that's why I make note of that in contract to please get your jobs covered or try to give me time to find another Ic (as a courtesy).I give everyone W9's and 1099's, and my accountant has told me that I've actually been overpaying my taxes...so I know in that regard I'm doing things ok -I'm not trying to cheat the system or anything.
It's just hard to pay hourly when the jobs are spread out. 30min visits here and there- or overnight pet sitting. No client would pay even minimum wage for that. (The sitters earn between $40-$60 per night to sleep over house/pet sit) minimum wage would be like $120 to them - and then adding on my part- that would be clients paying $150 a night!
My team would back me up too I know...if it ever came to court.
In fact -at the holiday party I told them I was becoming LLC and that if anyone wants to be an employee instead of IC to let me know.
I even threw it out there again recently- and no one wants that. So I'm giving them opportunity to be an employee if they prefer that, but no takers. Dillon himself even said he didn't want to be an employee. Which makes it especially frustrating that he has threatened to 'turn me in' for treating him as an employee. I just want to do the right thing- I would be horrified if I were charged with a felony!(What happened was he wasn't checking in and out of visits. Every time a walk is done, the dog walker checks in at beginning via text, and checks out at the end. We want to be sure all jobs done and also many of the clients like a screen shot or forwarded texts of the visit. I told him he wouldn't get paid for visits he wasn't properly checking in and out of. He said I had to trust him- I explained it wasn't about trust-it's my role to have the clients' wishes granted- to assure them when walks done and send pics. Most of my ICs communicate directly with the clients but he wasn't one that did that...I do have proof of him not doing visits correctly and/or just for a few minutes instead of whole time...
That video tape was a blessing!
Expert:  Lucy, Esq. replied 1 year ago.
It sounds like you're in good shape, as far as the IRS is concerned. And he needs to produce evidence that a job was done if he wants to be paid. If you have a video showing he didn't do the work, that helps you.
Good luck.